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The British Columbia Supreme Court recently considered the enforceability of a termination provision which limited an employee’s severance upon termination to the minimum amounts set out in the Employment Standards Act (the “Act”).

The employment contract in question contained a termination provision that provided:

Convergys may terminate your employment for cause, or by providing you with notice, or pay in lieu of notice in accordance with the Employment Standards Act.

The terminated employee argued that the notice provision was ambiguous because the clause did not say that notice was limited to the minimum notice provided for in the Act, implying that he could be entitled to more.

The court found that, while the second comma in the notice provision was unfortunately placed, on a plain reading the meaning of the clause is clear: the employee is entitled to only the minimum notice provided under the Act.

The employee also tried to argue that the contract was unenforceable due to the fact that it had a probationary period which allowed the employer to terminate his employment during the first three months of the agreement without notice or pay in lieu of notice. When the employee signed the contract, he had already been employed with the company for over three years. Therefore, he argued, the clause was in breach of the Act.

The court found the probationary clause did not apply to the employee at the time he signed the agreement, nor at the time of termination. The court went on to say that even if the clause did apply to him, it could be severed from the contract as unenforceable, leaving the remainder of the contract, including the termination provision, intact.

This case is helpful to employers as it indicates a willingness by the court to enforce minimum standards termination provisions even where the a contractual clause does not have wording which specifically limits the severance to the minimum statutory amounts. It is also a reminder to employers that properly drafted employment contracts can reduce uncertainty upon termination, including costs attendant on litigation disputing the enforceability of such provisions.

Miller v. Convergys CMG Canada Limited,2013 BCSC 1589

Any questions relating to the information presented in this article should be forwarded to Nazeer Mitha, Partner.